A $1.4 million line item in Gov. Gretchen Whitmer’s $60.2 billion budget proposal unveiled March 5 calls for a three-year project to catalog “hazardous materials pipelines” that cross Michigan waterways. Department of Natural Resources Director Daniel Eichinger told lawmakers this month the study, spurred by the debate over Enbridge’s Line 5 pipeline in the Straits of Mackinac, is needed to fill an information gap about dangers posed to Michigan waters.

A $1.4 million line item in Gov. Gretchen Whitmer’s $60.2 billion budget proposal unveiled March 5 calls for a three-year project to catalog “hazardous materials pipelines” that cross Michigan waterways.

Department of Natural Resources Director Daniel Eichinger told lawmakers this month the study, spurred by the debate over Enbridge’s Line 5 pipeline in the Straits of Mackinac, is needed to fill an information gap about dangers posed to Michigan waters.

Michigan has 3,500 miles of such pipelines criss-crossing the state, but state government has a comprehensive inventory of just 645 miles, according to the DNR. Those are related to Line 5, and identify nearly 400 water crossings.

“A lot of these are old,” Eichinger said. “A lot of the data about where they are and what sensitive environments or habitats they may cross is not well known or understood by us.”

Speaking to a state Senate appropriations subcommittee March 12, Eichinger said the “mapping exercise” to inventory pipelines would “give us critical business intelligence of where risk might reside underground.”

The plan is to digitize historic documents and gather information from pipeline owners, using GIS technology to overlay pipelines at water crossings. Once complete, the inventory “would be evaluated to determine priority water crossings, and we would provide that information to the public and applicable pipeline owners,” said DNR spokesperson Ed Golder.

“We have been pushing the state to look more holistically on oil pipeline infrastructure in Michigan and water crossings, so we are very supportive of this budget ask,” said Charlotte Jameson, energy policy and legislative affairs director for the Michigan Environmental Council.

The inventory project aligns with findings of the state’s Pipeline Safety Advisory Board (PSAB) that former Gov. Rick Snyder convened to study Michigan pipelines, and Line 5 in particular. In a set of recommendations to Snyder in December, PSAB members said the state should consider a hazardous liquids pipeline safety program that could involve partnering on inspection duties with federal regulators.

For about $70,000 a year, “there is an opportunity to have more control over the flow of information and establishing safe standards and practices, which the PSAB has learned has been a problem in evaluating Line 5 and other pipelines,” wrote Mike Shriberg, the National Wildlife Federation’s Great Lakes regional executive director.

The Michigan Agency for Energy also studied the potential for such a program. In addition to participating in federal pipeline regulators’ inspections, the agency said the state “should continue to seek ways to improve access to information about liquids pipelines in Michigan and to ensure the State remains connected to the decision-making processes surrounding such pipelines.”

Establishing a hazardous liquids safety program would also give state staff access to company inspection records and spill response plans, the agency said.

Enbridge spokesperson Ryan Duffy said the company is required to provide pipeline information to PHMSA.

“We also recently provided the State of Michigan with information on all Line 5 water crossings as part of our agreements,” Duffy said.

Liz Kirkwood, executive director of Traverse City-based For Love of Water, says it’s important for the state to clarify the role of pipeline companies when sharing information.

“It sounds great to do an inventory, but the question is: Is this a situation where industry should be providing more information to the DNR and PHMSA as the regulators?” Kirkwood said.

She added that the public’s understanding of the underground network of pipelines in Michigan is “very limited.”

“With Line 5, there are hundreds of river crossings and the public does not know the status of those sensitive waterways,” Kirkwood said. “Additional data would certainly be vital for greater transparency, knowledge and awareness.”

She added that the short staffing for pipeline inspections at the federal level and industry-friendly regulations make self-reporting even more important.

“A real takeaway is that the self-reporting from industry is fundamental to the public’s knowledge and awareness about the health of the pipelines,” Kirkwood said.

Former DNR Director Keith Creagh and Department of Environmental Quality Director Heidi Grether, who co-chaired the PSAB, appear to agree in a December letter to Snyder.

“The state should make sure pipeline companies are more transparent and the public has easy access to useful pipeline data and information,” they wrote in the letter.

During the March 12 committee hearing, Sen. Jon Bumstead, R-Newaygo, supported the need for an inventory study. He cited a recent oil leak in the Muskegon River from a corroded abandoned pipeline.

“I would think this is going to be a program we need to do,” Bumstead said.

“We really don’t know where they are and what kind of condition they’re in,” Eichinger said. “Before we put ourselves in a position to answer any of those questions, we have to know what we’re dealing with here.”

A San Diego firm’s proposed sale of its renewable energy assets will not affect plans for a wind energy project in West Michigan, company officials say. On Feb. 12, Sempra Renewables announced plans to sell its assets to a subsidiary of Columbus, Ohio-based American Electric Power Co. Inc. for $1.1 billion. Sempra’s portfolio includes 724 megawatts (MW) of wind energy and battery storage across the U.S.

A San Diego firm’s proposed sale of its renewable energy assets will not affect plans for a wind energy project in West Michigan, company officials say.

On Feb. 12, Sempra Renewables announced plans to sell its assets to a subsidiary of Columbus, Ohio-based American Electric Power Co. Inc. for $1.1 billion. Sempra’s portfolio includes 724 megawatts (MW) of wind energy and battery storage across the U.S.

The deal is expected to close in mid-April.

Sempra — a subsidiary of Sempra Energy — owns the 100 MW Apple Blossom wind project in Huron County and is planning to build the Kenowa Ridge project spanning Casnovia Township in Muskegon County and Tyrone Township in Kent County.

Lisa Briggs, government and community affairs manager with Sempra Renewables, said the sale will not affect plans for the 27-turbine, 100 MW Kenowa Ridge project. Township officials are still considering whether to grant the project a special land use permit. Environmental permits and eventually a power purchase agreement are needed before construction starts, Briggs said. Developers hope to bring the project online in 2020.

In a Feb. 18 letter to the Casnovia Township board, AEP Renewables President Greg Hall said all lease agreements signed thus far “will remain in full force and effect” after the sale, as will any permit conditions.

“I want to let you know that AEP supports the proposed project and is committed to working with you, the Township, Sempra Renewables, and other stakeholders post-closing to advance the project,” Hall wrote.

AEP is a major investor-owned utility based in Ohio that also owns the largest electric transmission system in the U.S. The company includes utilities in Texas, Indiana, Kentucky, Oklahoma and Louisiana.

As MiBiz reported in September, the Kenowa Ridge project would be the first major wind development in West Michigan since Consumers Energy built the Lake Winds project in Mason County in 2012.

Despite reports of some vocal opposition from residents and challenges generally with building new wind projects in Michigan, AEP says it’s committed to the project.

“Like Sempra, AEP is committed to strong stakeholder engagement and collaboration, and we work closely with local community groups including municipalities, business improvement districts, chambers of commerce, and local development corporations,” Hall said.

Over the past two weeks, Attorney General Dana Nessel has drawn attention to Michigan’s increasing electricity rates, pleasing consumer advocacy groups who say the issue has received little attention. Speaking to Michigan State University’s Institute of Public Utilities on Feb. 22, Nessel said in a statement she wants to “revive the legacy” of former Attorney General Frank Kelley in advocating for the public in rate cases before the Michigan Public Service Commission.

Over the past two weeks, Attorney General Dana Nessel has drawn attention to Michigan’s increasing electricity rates, pleasing consumer advocacy groups who say the issue has received little attention.

Speaking to Michigan State University’s Institute of Public Utilities on Feb. 22, Nessel said in a statement she wants to “revive the legacy” of former Attorney General Frank Kelley in advocating for the public in rate cases before the Michigan Public Service Commission. Four days later, Nessel filed testimony in an Upper Peninsula utility’s rate case, attempting to block more than $6 million in requested rate increases. Marquette-based Upper Peninsula Power Co. (UPPCO) has some of the highest electric rates in the country.

Nessel has noted that Michigan’s residential electric rates have increased 41 percent in the past 10 years, more than double the increase across the Midwest.

“Rates in this state are extremely high and we must do a better job of keeping them affordable, especially for our state’s most vulnerable populations,” Nessel said.

Her attention to electric rate increases is part of growing interest among advocacy groups in the state who say utilities — particularly Consumers Energy and DTE Energy — have been overcharging customers for years. Many of the rate increases are driven by increased infrastructure and modernization costs that critics say are higher than necessary.

The MPSC approved Consumers Energy’s latest rate increase in early January. The $99 million increase will hike the average residential customer’s bill by $1.62 a month. DTE’s pending rate case, which is expected to be decided in May, would increase average residential bills $9.42 a month.

While the Attorney General’s office has featured a consumer protection division that intervenes in rate cases before the MPSC, advocates said involvement has been lacking.

The state-funded Utility Consumer Participation Board, created in 1992, issues grants to organizations like the Michigan Environmental Council, Citizens Against Rate Excess and the Residential Customer Group to advocate on behalf of residential ratepayers. In the 2017 fiscal year, the UCPB issued nearly $700,000 in grants.

Along with Nessel’s interest, the Citizens Utility Board launched a Michigan chapter in late February to “educate Michigan ratepayers about their energy costs and empower them to advocate against unfair rate increases.”

Industrial concerns

While residential ratepayers have faced the largest increases, advocates for large energy users hope to raise awareness about the ratemaking process utilities go through every year. That process involves using projected costs to recover the expenses for programs like maintaining reliability, environmental controls, grid modernization and a wide variety of utility spending programs.

Rod Williamson, executive director of the Association of Businesses Advocating Tariff Equity (ABATE), said Michigan is among the one-third of states nationally that allow utilities to use projected costs as opposed to historical data in setting spending levels. While all businesses base spending on projected costs, “the difference is (utilities) are not operating in that competitive marketplace,” Williamson said.

“We’re seeing very serious concerns about the use of these projected costs resulting in rates for all customers that are higher than what is needed to collect the actual cost utilities are incurring,” he said.

ABATE says Consumers Energy routinely underspends on programs, compared to levels that are approved by the MPSC. For example, the group points out that in a rate case opened in 2016, Consumers had been approved to spend $131 million on grid reliability, but only spent $85 million.

In a February 2017 order in the case, the MPSC said it “finds Consumers’ explanations regarding past underspending troubling. … Because the evidence suggests Consumers did not spend the amount approved for the program in its last rate case, and could not accurately trace the funds, the Commission has serious doubts about the company’s willingness to spend the projected expenditures on its reliability program during the test year in this rate case.”

Usually that excess funding is directed to other programs or carried over into the next rate case.

“The problem is, you’re on to another set of projections for more money,” Williamson said.

Energy laws signed by former Gov. Jennifer Granholm in 2008 allowed utilities to use projected costs instead of relying on a historical test year, or the most recent 12 months. The laws also reduced the amount of time the MPSC had to rule on rate cases, from two years to one year. Utilities were also allowed to self-implement rates that turned out to be higher than what the MPSC approved, Williamson said. While self-implementation was eliminated in revised 2016 energy laws, the rate case time frame was shortened further.

“It’s hard for (utilities) to argue when they’re filing every year that there is a significant lag like there used to be if they use the historical test year,” he said. “The Legislature made too many adjustments and swung the pendulum too far.”

State Rep. John Reilly, R-Oakland Township, introduced a bill in 2018 that would have required utilities to use a historical test year in setting rates that could be adjusted “only for known and measurable changes.” The bill didn’t make it out of committee.

Consumers spokesperson Katelyn Carey said using historical data to set rates “would create a mismatch between revenues being collected from customers and the actual expenses necessary to meet the needs of customers. Future test years ensure that rates reflect the recovery of costs for the period in which they will be in effect.”

Carey added that while Consumers plans to stick to its spending levels for major items like forestry, “business realities sometimes result in fluctuations in spending, both up and down. Historical spending is one factor which is examined in rate cases in order to determine the projected costs for a forward test year, but it alone is insufficient to determine rates for a future test year.”

DTE spokesperson Peter Ternes said “adhering strictly to historical spending would prevent the utility from making shifts in spending to facilitate new policies and goals. Using a projected test year also allows the company to factor out items from the past that will not be future targets of spending, thus helping maintain affordability while shifting spending to match emerging policies and goals.”

A remedy?

Advocates say the issue could be resolved through retroactive ratemaking that would reimburse customers, or through performance-based rates that base utilities’ rate of return on targeted policy outcomes.

The sweeping energy legislation of 2016 required the MPSC to study performance-based ratemaking further and issue a report. The MPSC is evaluating how metrics could be used for utility investments.

MPSC spokesperson Nick Assendelft said it’s the obligation of MPSC staff to review projections to ensure spending requests are “reasonable and prudent.”

“That projected spending will be revised by staff based on historical spending by a utility as well as on reasoned, thoughtful estimations of future program spending,” he said.

MPSC staff then makes recommendations to the three-member commission, which has the final decision.

“Reconciliation after the fact with rebates to customers for ‘underspending’ the projected amount would help and could be done either in total or for specific spending categories of concern,” Bandyk said. “Performance-based ratemaking would allow the utility to spend less and earn more profit, but that only works if they have performance metrics and performance pay that is tied to long-term performance.”

A nonprofit “green bank” that finances residential and commercial clean energy projects continues to grow, surpassing $175 million in private investment since 2009. Officials with Michigan Saves Inc., which provides low-interest loans for energy efficiency and renewable energy projects, have an ambitious goal of $1 billion of investment by 2023.

A nonprofit “green bank” that finances residential and commercial clean energy projects continues to grow, surpassing $175 million in private investment since 2009.

Officials with Michigan Saves Inc., which provides low-interest loans for energy efficiency and renewable energy projects, have an ambitious goal of $1 billion of investment by 2023.

“That went into people’s homes, businesses and nonprofit buildings,” said Selma Tucker, a spokesperson for Michigan Saves. “That private capital is able to cover everybody and create a market in the state. It’s really been taking off.”

Officials reported this month that residential loan volume increased 67 percent and commercial loan volume grew 30 percent in 2018. To date, the program has financed about 17,000 projects in homes and commercial buildings, according to Michigan Saves’ 2017 annual report, the most recent available. The combined annual savings on utility bills was $11.4 million, or $268 for residential customers and $7,122 for commercial customers, on average.

Michigan Saves secured a $2.5 million commercial installation late last year, the program’s largest to date. Tucker couldn’t provide further details at this point.

The nonprofit provides favorable, low-interest loans through a network of credit union lenders to residential and commercial utility customers. It has a network of about 600 authorized contractors, which it hopes to grow to 900 companies. Michigan Saves maintains a loan loss reserve that reduces the risk for lenders.

“These lenders are lending because of the security Michigan Saves provides,” Tucker said.

A majority of projects financed through Michigan Saves are for energy efficiency, which officials underscore in light of the recent harsh winter weather and high demand on the electric grid.

But an increasing amount of the funding is for renewables, particularly solar. In 2017, Michigan Saves surpassed 1 megawatt worth of solar capacity built under the program.

Curt Monhart, president of Grand Rapids-based project developer E3 Prime Environments LLC, said each program is a favorable alternative to traditional commercial bank loans.

“For the energy efficiency business in total, we’re just seeing the tip of the iceberg. There are so many buildings that could benefit from these programs,” Monhart said. “Michigan Saves is a nice alternative where you can get down to smaller value projects.”

Increasing investment

Michigan Saves was created with an infusion of cash under Public Act 295 of 2008 — which also created the state’s first renewable energy standard — and the American Recovery and Reinvestment Act of 2009 under President Obama. Those programs created a roughly $10 million starting point for a loan loss reserve, which is being held in trust to provide security for lenders.

Tucker says the program is looking for another capital infusion to hit the $1 billion milestone by 2023, which could also come from nonprofit or public sources. Every dollar that’s in a loan loss reserve has resulted in $20 in private investment until now, he added. The goal is to raise $20 million for the reserve.

“We think there’s a really great opportunity for the state as it’s talking about blue and green infrastructure,” Tucker said. “Our banks and lenders have capital, that’s not the issue. The issue is making sure they have a construct that allows them to lend.”

Tucker said the program plans on a 5 percent default rate, but that figure currently stands at just more than 1.5 percent.

The program also intends to focus increasingly on projects for low-income customers who may not qualify for energy efficiency assistance through their utility, Tucker said. DTE Energy sponsors a revolving loan fund through Michigan Saves that offers low-interest rates and rebates for qualified residents.

“We know there’s a gap and we want to serve those people,” Tucker said.

Michigan Saves’ growth also comes as more Michigan communities adopt PACE financing, a similar type of program for commercial properties. However, PACE is structured differently and is tied to a property instead of an owner. Municipalities also have to opt in to PACE, which Monhart said included a learning curve in some areas skeptical of the program, including Kent County. Detroit-based Lean & Green Michigan LLC, which administers PACE programs in Michigan and was started by Congressman Andy Levin, reports 24 counties and 14 cities and townships have adopted the program.

Monhart says PACE and Michigan Saves fill a different niche of the market, with PACE geared toward larger projects with longer lending terms. But that’s beginning to change as Michigan Saves grows and attracts more lenders.

“They’re competing a little bit more now because Michigan Saves has gone up to longer-term loans,” Monhart said. “You’re seeing that overlapping a bit with the PACE business.”

Gov. Gretchen Whitmer appointed former state representative and clean energy advocate Dan Scripps to the Michigan Public Service Commission on Feb. 8, filling a key vacancy as the administration brings a heightened focus to renewable energy and climate change.

Gov. Gretchen Whitmer appointed former state representative and clean energy advocate Dan Scripps to the Michigan Public Service Commission on Feb. 8, filling a key vacancy as the administration brings a heightened focus to renewable energy and climate change.

Michigan’s energy system is undergoing a significant transformation as utilities close coal plants and transition to more natural gas and renewables, leaving key policy decisions to the MPSC.

With a Republican-led Legislature, bold action on clean energy will most likely come from the administration. Meanwhile, the MPSC increasingly is focused on clean energy issues like solar power, grid modernization and utilities’ transition from coal.

In addition to overseeing the rates utilities charge customers, the MPSC also is grappling with the role of third-party developers and their opportunity to build renewable energy projects alongside rate-regulated utilities.

Both Consumers Energy and DTE Energy, for example, are seeing an unprecedented amount of applications from developers to build solar projects in their service territory.

Rod Williamson, executive director of the Association of Businesses Advocating Tariff Equity (ABATE), said the group plans to meet with Scripps very soon.

“It’s our expectation that Dan is going to continue to follow the same principles of cost of service that’s required by legislation as he takes over,” Williamson said.

Williamson said ABATE is “concerned” about the recent string of coal plant closures and maintaining grid reliability and affordable costs.

However, the group supports a “diversified portfolio of generation” and “renewables certainly need to be a part of that portfolio.”

“We just have to be careful that we’re not moving too quickly in the direction of a certain type of renewable generation,” Williamson said. “We’re hopeful that (Scripps) will approach that with an open mind as well.”

Scripps, a Northport resident, is the Midwest policy program director for the Energy Foundation and a past president of the Michigan Energy Innovation Business Council. He fills a vacancy on the MPSC after Whitmer appointed former commissioner Rachel Eubanks as state treasurer.

“I have full confidence that Dan Scripps will ensure we have a reliable and affordable energy supply to keep our economy moving and keep families safe,” Whitmer said in a statement. “We need to continuously find innovative ways to keep the lights on and the heat flowing, and Dan is the right guy for the job.”

Meanwhile, Whitmer has an opportunity to appoint a second member to the three-person commission when Commissioner Norm Saari’s term expires on July 2. Saari is a Republican appointee of former Gov. Rick Snyder. Observers have said it’s unlikely Whitmer will reappoint Saari.

The MPSC appointments are subject to the advice and consent of the Senate.

Former Democratic legislator Dan Scripps has been appointed to the Michigan Public Service Commission, Gov. Gretchen Whitmer announced today.

Former Democratic legislator Dan Scripps has been appointed to the Michigan Public Service Commission, Gov. Gretchen Whitmer announced today.

Scripps, a resident of Northport, currently serves as Midwest policy program director for the Energy Foundation. He succeeds Rachel Eubanks, who Whitmer recently appointed as the state treasurer.

The appointment to a term expiring July 2, 2023 is subject to the approval of the state Senate.

Scripps previously served as president of the Michigan Energy Innovation Business Council and was involved with the Institute for Energy Innovation. He’s a graduate of Alma College and earned a law degree from the University of Michigan.

While in the state Legislature, Scripps also helped author the state’s revolving loan fund for renewable energy and energy efficiency.

“I have full confidence that Dan Scripps will ensure we have a reliable and affordable energy supply to keep our economy moving and keep families safe,” Whitmer said in a statement. “We need to continuously find innovative ways to keep the lights on and the heat flowing, and Dan is the right guy for the job.”

MUSKEGON — A West Michigan solar energy developer is pursuing new projects and job-training in low-income communities across the state that qualify for tax relief under recent federal tax reforms. The Tax Cuts and Jobs Act of 2017 created qualified Opportunity Zones that allow investors to defer taxes on capital gains meant to spur development in low-income areas. While most projects involve real estate development, some developers across the U.S. are beginning to explore the potential for renewable energy in Opportunity Zones.

MUSKEGON — A West Michigan solar energy developer is pursuing new projects and job-training in low-income communities across the state that qualify for tax relief under recent federal tax reforms.

The Tax Cuts and Jobs Act of 2017 created qualified Opportunity Zones that allow investors to defer taxes on capital gains meant to spur development in low-income areas. While most projects involve real estate development, some developers across the U.S. are beginning to explore the potential for renewable energy in Opportunity Zones.

Rob Rafson, founder of Muskegon-based Chart House Energy LLC, says he has multiple projects lined up in these zones over the next two years.

A key component of his projects is job training for residents in low-income communities. He has $5 million of projects expected in 2019 and at least $15 million in 2020.

“We think this Opportunity Fund we’re developing is going to allow us to not just build solar in these communities, but create permanent jobs in these communities,” Rafson said.

Rafson says the qualified Opportunity Zone program adds another 15-percent tax benefit on top of 30-percent federal tax credits already available for solar energy projects. He created an Opportunity Fund specifically for solar projects in these designated distressed communities.

Chart House recently completed solar projects in Ypsilanti and Detroit with others planned in Flint, Muskegon Heights and Muskegon. Qualified Opportunity Zones are available in every Michigan county.

“We’re in the process of reviewing all of the locations and opportunities,” he said.

The federal program, which runs through 2026, incentivizes investment in economically distressed areas. It defers taxes on capital gains if they are directed into qualified Opportunity Zone funds, and also allows for up to 15-percent tax savings on the new investment if it’s held for seven years. After 10 years, there are additional tax savings on the appreciation of the investment.

Fund investments have to be made within 180 days of capital gains events.

With trillions of dollars in unrealized capital gains in the U.S., some clean energy advocates see the potential to spark investment in the industry even though the mechanism hasn’t yet seen widespread interest, Greentech Media reports.

“For the past 20 years, there has been new market tax credits, which are an incentive for banks to invest in low- and moderate-income communities. That has done some great things,” Rafson said. “This is one of the few tax benefits that allow and encourage private investment in these communities.”

Clarification needed

Katie Roskam, an associate at Varnum LLP in Grand Rapids who helps investors wade through the new rules, said funds are “definitely being established,” particularly focused on rehabbing properties.

“The end of the year was busy; a lot of people were trying to deploy capital,” Roskam said.

She added that renewable energy projects are also part of discussions, ranging from only energy installations to installations as a part of an accompanying new development.

“(Developers) are trying to find costs they can capitalize into the property to increase its value so it makes sense,” Roskam said.

But while projects are getting off the ground, the Internal Revenue Service still hasn’t finalized rules for reporting taxes under the program. The proposed regulations were released in October.

“There is so much we don’t know,” Roskam said of the draft rules.

She said clarity is needed in defining active businesses, selling fund interest versus assets and clarifying cross references in the tax code “that don’t even quite make sense right now,” to name a few.

“There’s guidance out there that helps us get comfortable to pursue projects right now, but there’s still a lot missing in terms of how this plays out five to ten years down the line,” she said. “For now, it’s not stopping people from moving ahead at this point.”

Questions abound

Jigar Shah, president of Generate Capital, a San Francisco-based firm that recently redeveloped a shuttered biodigester facility in Fremont in Newaygo County, says he’s looking at Opportunity Zones spurring clean energy projects with a “glass half-full” attitude.

“In general, there’s a lot of uncertainty,” Shah said.

Particularly, qualifying for a bonus 5-percent capital gains deferral requires investing by the end of 2019, he said.

“A lot of people want to do that, but you need the rules to figure that out,” he said, adding that it’s unclear how much savings are possible. “The question of how much I give you depends on how much I think I’m saving money on taxes. I can show my intention of wanting to do this all day long, but if I can’t get to the bottom of it, I’m not necessarily going to wire the money for it.”

For the program to be effective in driving clean energy growth, Shah says it’s about additionality, or whether the policy will act as a sole driver of the projects.

“Is something going to happen that would have but for this policy? I don’t know the answer to that,” he said.

Moving ahead

However, Rafson is hitting the ground running. He said his projects will mostly involve nonprofit and government facilities, with a strong focus on job training.

His concern involves out-of-state developers who may bring in capital for projects, and “then 10 years later take their money out of the community.”

“One of my guys coined the phrase, ‘We’re empowering people in the community, not just powering the community,’” he said.

Foresight Management has acquired Grand Rapids-based Building Performance Team Inc., expanding the company’s in-house services in energy modeling and building commissioning.

ZEELAND — Foresight Management has acquired Grand Rapids-based Building Performance Team Inc., expanding the company’s in-house services in energy modeling and building commissioning.

The asset purchase came about after the two firms worked together on projects in the past, Foresight Management President Brian Pageau told MiBiz, noting that he’s known Building Performance Team President James Dirkes for the past six years.

Building Performance Team, an energy engineering firm, offered the Zeeland-based company “deep expertise in a few very niche areas,” Pageau said in an email.

When a mutual friend suggested Dirkes was looking to sell the business, Pageau approached him to see if they could work out a deal.

“This was welcome news to me because I have wanted Jim on our team full time for a few years now,” Pageau said. “Once Jim and I sat down to talk about this explicitly, it all came together in less than six months.”

Terms of the deal were not disclosed.

Foresight Management, an energy consulting firm, now plans to service BPT’s base of clients with its suite of energy management and cost reduction services, including strategic planning, data collection software, energy procurement services, and facilities energy engineering, among others.

Dirkes will now serve as the team lead for building performance at Foresight Management. He founded BPT in 2007 after previously working at Comstock Park-based Rapid Engineering and at the University of Michigan.

Coinciding with the acquisition, the growing Foresight Management also added Chris Borchert as a new customer experience manager, according to a statement.

The Michigan Public Service Commission has started what could be a two-year process to govern how renewable energy projects are connected to the electric grid. The plan to make new interconnection rules seeks to resolve an unprecedented backlog of requests from independent power producers to build solar projects at a time when utility customers increasingly are turning to solar for self-generation.

The Michigan Public Service Commission has started what could be a two-year process to govern how renewable energy projects are connected to the electric grid.

The plan to make new interconnection rules seeks to resolve an unprecedented backlog of requests from independent power producers to build solar projects at a time when utility customers increasingly are turning to solar for self-generation.

The interconnection process between developers and utilities is a fundamental first step before beginning plans, whether for large projects or smaller residential installations. Utilities have to prepare the distribution system for new generation that comes online, but the problem is they haven’t seen hundreds of requests come in virtually at once, as recently happened.

Late last year, the MPSC opened a docket seeking input from interested parties before it officially begins a rulemaking process, which takes about 18 months. The MPSC says Michigan’s interconnection rules are outdated based in part on new federal guidelines and Institute of Electric and Electronics Engineers standards, as well as new state energy laws passed in 2016.

More immediately, Consumers Energy and DTE Energy have hundreds of megawatts of proposed solar projects from developers waiting in their interconnection queue.

“We’re looking at a system to handle maybe five or six (projects) in a year,” said Paul Proudfoot, director of the energy resources division at the MPSC. “Now we have hundreds of projects.”

Integrating all of this additional generation into the grid is a complicated equation for utilities and regulators, he added.

“You end up with an unsolvable problem, and I don’t know if the rules will really fix that problem,” Proudfoot said. “Is this a passing phase (of development interest)? Should we gear up with expertise and processes to handle this activity of interconnecting? DTE, Consumers and developers are struggling with this.”

‘Things have changed’

Michigan’s first interconnection rules date back to the early 2000s and were updated in 2009 following energy legislation encouraging more renewable energy.

The rules apply both to small and large projects divided into four categories up to 2 MW and a fifth beyond 2 MW.

Tim Lundgren of Energy Michigan, a trade association representing independent power producers, said “things have changed” since the first rules were put in place to address new merchant power plants.

“We’ve seen changes nationally and in Michigan with a movement from large centralized utility-owned generation into smaller localized projects,” Lundgren said. “Adding all of that local generation places different kinds of demands on the grid.”

MPSC Chair Sally Talberg said last month that interconnection rules are a “foundational element that’s going to help us adapt to a world where increasingly distributed generation is on the system.”

A key solar driver involves ongoing proceedings over the federal Public Utilities Regulatory Policies Act, or PURPA, and developers hoping to build projects under these contracts with utilities. PURPA requires utilities to purchase power from an independent producer at a set price if it’s cheaper than the utility could build it.

“Both (DTE and Consumers) are overwhelmed with the number of projects coming into their queue,” Lundgren said. “They weren’t anticipating the scope and size of interest.”

Michigan is following Minnesota’s lead on new interconnection rules. Minnesota faced a similar backlog of projects following a state-mandated program for community solar, which allows ratepayers unable to build their own projects to buy into solar.

The MPSC plans to address timelines, required studies, costs, legal responsibilities of parties, microgrids and energy storage, among other topics.

Lundgren hopes new rules particularly address the timeline and cost of new projects so developers can “make accurate development plans.”

The interconnection process for larger projects also comes after a determination from the MPSC of whether the new capacity is needed. Utilities have debated this issue recently by suggesting they don’t need the additional capacity from independent projects and therefore should pay less for the generation.

“The utility views many of the interconnecting projects as a competitor,” Lundgren said. “The rules need to be very clear about specific timelines, expectations and costs that don’t allow a lot of room for utility discretion.”

Consumers Energy spokesperson Brian Wheeler said in a statement that updating interconnection procedures “will be key to enable a balanced transition to expanding renewable, distributed generation resources in Michigan.”

He added that the utility supports rules that will “appropriately account for the significant changes we have seen in the state’s interconnection landscape — particularly a strong and growing interest in solar generation. New rules must also build in flexibility to account for possible additional changes as new energy technologies become more widespread. … Consumers Energy supports policies that share costs for electric service fairly among the households and businesses we serve, without asking any group of customers to subsidize another.”

Market signal

The Chicago-based Environmental Law and Policy Center has been involved with interconnection rulemaking across the Midwest for more than a decade, including recently in Minnesota.

Staff attorney Brad Klein said Michigan lags other states “most fundamentally” by not following standard procedures adopted by the Federal Energy Regulatory Commission (FERC) meant to serve as a model for states. In addition to consistency, the federal rules “provide fast-track pathways to get small systems interconnected more quickly,” Klein said.

Additionally, transparency could be improved to help developers determine utilities’ needs.

“The current situation (in Michigan) has a large number of projects going in at one time, but going into a very opaque black-box process at the utilities,” Klein said. “The problem is no one can really see inside that process to know whether the delays are justified or how to avoid them in the first place.”

Without that clarity, “the result is a lot of frustration in the market and uncertainty, which leads to higher prices, confusion and not a good investment landscape,” Klein said.

The MPSC’s Proudfoot said it may take up to two years to get some of the larger proposed solar projects interconnected.

“I think it’s going to be an exciting next few years,” he said. “We’re going to be operating a different system 10 years from now.”

--EDITOR’S NOTE: This story has been updated to note the MPSC opened a docket — not a rate case — to take input from interested parties on the interconnection process.

For about $21 million, Michigan can build a statewide network of electric vehicle fast-charging stations to meet anticipated demand by 2030.

For about $21 million, Michigan can build a statewide network of electric vehicle fast-charging stations to meet anticipated demand by 2030.

That’s according to a study released last month by the Michigan Agency for Energy. The report maps out an optimal charging network from Kalamazoo and Ann Arbor to Houghton in the Upper Peninsula, which officials say is a key step in alleviating range anxiety among drivers and avoiding investments in stranded assets.

Researchers at Michigan State University modeled where to deploy the stations to minimize the overall investment and driver delay times at each stop, focusing on areas between the state’s major cities. The map is based on state highway-usage data and tourism and considers seasonal demand.

Resolving range anxiety — which is based on the ability of an electric vehicle driver to charge farther away from home — is a key driver of EV adoption, officials say. The study broadly maps how an EV driver could travel the state.

“The model would not only resolve range anxiety for drivers here, but also for folks coming into the state,” said Robert Jackson, director of the agency’s Michigan Energy Office. “It’s a bare-bones system. We didn’t want any stranded assets in 2030 and didn’t want to overbuild it. If you’re going between cities, you’re going to need fast charging.”

First of its kind

Researchers considered multiple scenarios based on a forecasted 6 percent market share for EVs by 2030, a relatively conservative projection of EV penetration from the Midcontinent Independent System Operator, which oversees the regional electric grid.

The low-tech scenario considers 70 kilowatt per hour batteries with a 50 kWh charger at more charging stations, while the high-tech scenario considers more powerful batteries and chargers at fewer charging stations.

The high-tech scenario would cost about $13.5 million less but have about half the number of charging stations.

Jackson said the most likely scenario would be a combination of the two, with higher charging capacity but lower battery capacity. This “hybrid” model results in 193 charging outlets at 35 stations for a total cost of $21.6 million, according to the study.

“We really took a mathematical approach to this in terms of how to do the placement,” Jackson said, adding that arbitrarily building EV charging stations could ultimately make them less useful and lead to them being stranded assets. “I haven’t seen states or national labs take this approach to thoughtfully planning an EV charging station network.”

Mehrnaz Ghamami agrees. A professor at MSU’s College of Engineering who co-authored the study, Ghamami has been “on the frontline of the research” modeling EV deployment for nearly 10 years.

“The modeling framework and algorithm is actually unique,” Ghamami said, adding that no other state has gone to this level of detail to map out an ideal EV charging network.

The second phase of the study will focus on urban areas and consider other station placement factors, the role of ridesharing and local regulations to encourage EV usage.

The findings are the result of a series of meetings with utilities, charging companies, automakers and clean energy advocates focused on how the state can build the infrastructure to support EV deployment.

“We think it’s being done the right way,” said Mike Alaimo, executive director of Clean Fuels Michigan, which has been involved with the planning process. “We hope to use that to further educate policymakers on what investments need to be made and why the study found what it did.”

‘Important crossroads’

The state also will use the study as it decides how to spend up to $9.9 million of funding over the next three years dedicated specifically for electric vehicles in the 2016 Volkswagen settlement. Michigan received a total of $64 million under the settlement for the automaker’s scandal involving cheating on emissions testing.

The state plans to open the grant application process for Volkswagen funding this year. Jackson said applicants will need to show that they’ve worked with utilities and charging companies.

“The assumption is that on the first round (of funding), site locations are picked based upon our model,” he said.

Jackson said the funding could make up roughly one-third of the total investment, with the rest coming from utilities and third-party site hosts. Ideally, some of the first chargers could be installed along the network this summer, he added.

DTE Energy and Consumers Energy have cases pending before the Michigan Public Service Commission that propose a total of $20.5 million in EV charging pilot programs.

Advocates also remain optimistic that the Whitmer administration will further support the EV work done so far.

“I think we’re at a really important crossroads right now with the work being done around strategy, planning and policy development and putting those things into action,” Alaimo said. “We’re highly confident these are policies the state of Michigan needs to put in place to support its auto sector and a cleaner environment.”